scorecardresearchThese fixed deposits can earn you up to 8% interest. Details here

These fixed deposits can earn you up to 8% interest. Details here

Updated: 15 Feb 2023, 08:05 AM IST
Investors can make the most of prevailing high rates of interest offered on fixed deposits (FDs) of particular tenors such as 399 days, 555 days or 666 days. We share more details here.
A few banks have recently raised their term deposit interest rates in the wake of repo rate hike

A few banks have recently raised their term deposit interest rates in the wake of repo rate hike

During the past nine months ever since Reserve Bank of India (RBI) started to raise repo rates, commercial banks, too, have also been raising interest rates on fixed (or term) deposits across tenors.

Although the increase in fixed deposits (FDs) interest rates has been lower than the repo rate hike, the interest rates have risen to as nearly 7.5 to 8 percent per annum.

In order to maximise the earnings via fixed deposits, therefore, investors can opt for special tenor term deposits over the regular ones.

For instance, Bank of Baroda, under its Tiranga plus deposit scheme, offers 7.05 percent for deposits of 399-day tenor, whereas the 400-day tenor deposit will fetch a lower return of 6.75 percent per annum.

Bank                                                  TenorInterest (%) Senior Citizens
Bank of Baroda                        399 days7.057.55
Canara Bank                                             400 days7.157.65
PNB                                                           666 days7.257.75
Karnataka Bank                                         555 days7.37.7
Bandhan Bank                                          600 days88.5

Similarly, Canara Bank offers 7.15 percent on term deposits of 400-day tenor whereas if someone chooses a tenor of 401 days, the rate of interest would decline to 6.8 percent.

Punjab National Bank (PNB) now offers gives a higher rate of interest of 7.25 percent on FDs of 666-day tenor, while the interest rate falls to 6.75 percent on deposits of 667-day tenor.

The depositors who opened term deposit accounts with Karnataka Bank for 555 days are entitled to earn 7.3 percent against 6.8 percent for 556-day deposits.

Also, the maximum interest is offered by Bandhan Bank that offers 8 percent interest on 600-day term deposits against 7.25 percent offered on slightly longer deposits.

ALSO READ: Bandhan Bank hikes interest rates on fixed deposits

Needless to mention that the senior citizens are entitled to earn even higher rate of interest i.e., 50 basis points more than offered to the younger investors.

However, before investing the money in term deposits, investors should make note of the following points:

1. Don't stay confined to one tenor: It’s always recommended to choose term deposits across tenors. Merely to earn 50-70 basis points higher interest, investors should not put a lot of money in these special term deposits, particularly because they are long duration deposits.

2. For higher return: Investors can invest in the name of their parents to earn a higher interest. Also, if you fall in the highest tax slab, you can invest money in the name of your adult children so long as they are either students or fall in the lower tax slab. This will lead to a lower tax outgo.

3. Don't ignore financial goals: It’s vital to ensure that the tenor of these deposits coincide with your financial goals. So, if you have a financial goal which is due in the next one year or so, it is not rational to lock your savings in a long duration deposit of such kinds.

Small finance banks
First Published: 15 Feb 2023, 08:05 AM IST